HOPE MILLS, N.C. — Republicans in Congress are looking to deliver pro-growth tax reform before the end of 2017. The Trump Administration, the House Committee on Ways and Means, and the Senate Committee on Finance are banning together to develop a framework for a 21st century tax code.
The plan is designed on the premise it will provide tax relief for middle-class families; establish a “postcard” tax filing; provide tax relief for businesses with a focus on small business; end incentives that ship jobs, capital and tax revenue overseas; broaden the tax base; and close special interest tax breaks and loopholes.
U.S. Rep. Richard Hudson (R-N.C.) and House Republican Conference Chair Cathy McMorris Rodgers (R-Wash.) hosted a tax reform roundtable with small businesses in Hope Mills with a goal of sharing the plan and hearing feedback on what matters to business owners.
“We want people to have higher wages, more job opportunities, and we want to bring jobs back to America. We want to simplify the tax process for most Americans,” said Hudson. “We passed a budget this week that sets the table for tax reform and we hope to have a tax bill out of the House by Thanksgiving and have tax reform to the president by Christmas,” said Hudson.
“People will see more job opportunities, businesses here expanding and more opportunity for everybody,” he added.
Under the tax reform framework, typical middle-class families should see less of their income subject to federal income tax. The plan simplifies the tax code and doubles the standard deduction to $24,000 for married taxpayers filing jointly, and $12,000 for single filers.
“This plan is going to benefit everyone. You think about someone who is single and has their own small business, we are doubling the standard deduction,” said McMorris Rodgers. “The child tax credit, if she is a single mom with kids, she will see an increase in the child tax credit.”
To simplify the tax rules, the additional standard deduction and personal exemptions for the taxpayer and spouse are consolidated into this larger standard deduction.
Under current federal law, taxable income is subject to seven tax brackets. The framework aims to consolidate the current seven tax brackets into three brackets of 12, 25 and 35 percent.
“Tax reform is long overdue and there is so much potential for everyone in this country. We want more jobs, bigger paychecks and to simplify the tax code,” said McMorris Rodgers.
“We have been working on this for months, the House, Senate and the White House,” she added. “The tax code is very complicated, with a lot of details. Each member of the Ways and Means Committee has been vocal in the discussion. Even after the first draft is completed, we are going to continue working, obtaining feedback and hear people’s concerns so we get it right.”
“We are having this debate (about tax reform) out of closed doors, in front of and with the American people,” said Hudson. “We want feedback from real people in the real world about what concerns them because tax reform will affect them.”
People that will be affected by the tax reform include small businesses in North Carolina like JEB Designs of Hope Mills. JEB Designs is a small business with 30 employees that have supplied screen printing, embroidery and trophy sales for 30 years.
“The employees and management team of Jeb Designs are representative of the millions of small businesses that form and maintain the economy of the United States,” said John Buie, JED Designs chief financial officer.
“The promise coming out of Washington is both a reduction of the tax burden and an overhaul of the internal revenue code,” he continued. “Through the reduction of tax burdens, the hope is that it will free up funds to allow businesses, including ours, to buy machinery. Buying an embroidery machine will cost about $60,000. With a new machine, we will need new people. The hiring of additional employees is another factor that will come into play with tax reform.”
While the plan has several components, small businesses like JEB Designs are slated to see some relief. The proposed framework limits the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25 percent.
The tax structure for corporations will see a change as well. The tax reform framework reduces the corporate tax rate to 20 percent — which is below the 22.5 percent average of the industrialized world.
McMorris Rodgers is leading roundtable discussions across the country to gain feedback from individuals, families and small businesses that would see changes as a result of the tax reform plan. While the House of Representatives and the Senate are working to pass the plan, an implementation process, should the plan pass into law, has yet to be decided.
“The first step is get it passed through Congress and get it signed by Congress,” said McMorris Rodgers. “That is where we are right now and we are very excited to be moving forward on what we see as a once-in-a-generation opportunity to bring down tax rates, create more jobs and increase wages. That is what tax reform represents. It is truly going to increase people’s lives, that is what tax reform represents in this country.”